State Withholding Severance Tax Money

July 9, 2014

MOUNDSVILLE - Marshall County Commissioner Don Mason believes state officials are withholding about $1.6 million worth of severance tax revenue for coal, oil and natural gas - a development that may lead the county into a shortfall at the end of the fiscal 2014 budget year.

"I don't know how we can tell our constituents that, here we are in the middle of the Marcellus shale, and we don't have any oil and gas severance money," Mason said Tuesday during a meeting of the commission. "We have not received any oil and gas severance money for fiscal 2014. Marshall County is being shorted about $1.6 million, in my opinion."

Mason and County Administrator Betsy Frohnapfel said the estimated $1.6 million would total about $800,000 to $900,000 in coal severance, with the remaining portion collected from oil and natural gas severance. Frohnapfel said the oil and gas severance collections have increased steadily over the past few years, adding the amount was about $200,000 for fiscal 2012 and about $420,000 for fiscal 2013.

Article Photos

Photo by Casey JunkinsMarshall County commissioners, from left, Don Mason, Brian Schambach and Bob Miller convene for a meeting Tuesday.

Normally, these severance taxes would be placed into the county's bank accounts by June, which serves as the final month of each fiscal year.

However, commissioners received a letter from West Virginia Treasurer John Perdue on June 27 alerting them they would not receive the oil and gas money until Oct. 1. The letter states the coal severance should come some time this month.

Perdue's letter indicates the State Tax Department wants to move the oil and gas severance tax distribution date to Oct. 1. Mark Muchow, deputy secretary for the West Virginia Department of Revenue, said the tax department needed to get caught up with the industry. He said the coal severance money should be going out any day now.

"They use the most recently available production data to determine the amount of tax to be paid," Muchow said. "This will allow them to use more recent and accurate production data."

Frohnapfel said the county did not allocate oil and gas severance tax revenue as a line item in the fiscal 2014 budget, but did plan to spend the anticipated coal severance money. Because fiscal 2014 did not end until June 30, Frohnapfel said the county does not yet have final numbers. However, she and County Clerk Jan Pest believe there may now be at least a temporary budget shortfall because the $800,000 to $900,000 they planned on having in the bank is not there yet.